Tuesday, April 27, 2010

It took a few moments to tease out an argument and orient myself to Bastiat’s approach and style, but I gather that he is quit the champion of free trade and competition, and a rabid opponent of protectionism. However, these elements could easily be lost in his less then adept sophistry (which is actually just an elaborate version of sarcasm). I am sure in 1850 this had all the sting of a smack to the mouth, but today one can’t help but struggle with his rhetorical devises. Though in Bastiat’s defense, resurrecting a 2500 year old rhetorical technique does lend the comparatively new discipline of economics an air of ancient credibility and timeless wisdom. Anyway, here is the most compelling idea I find in Bastiat's writing as well as Landsburg's: an artificial disruption to the natural trade balance (i.e. allowing both sides to maximize their comparative advantage) has a multi-fold impact that reaches well beyond the parties directly involved. Foremost among them is the issue Landsburg brought up, that artificial protection of one part of the economy will invariably harm another—probably unpredictable—part of the economy. Furthermore, the harm may not be equalized to the extent of the protectionism, it may be many times more harmful. A secondary characteristic of protectionism is brought up by Bastiat, he finds it analogous to a swamp in the middle of the road. Sure goods will eventually make their way across the barrier, however the overall cost is considerably increased as well as an overall decrease in efficiency.

Bastiat is without a doubt my favorite writer of popular economics. Sure he never really provided any original contributions to the science, but his uncanny ability to bitchslap economic illiterates with the error of their ways had more of an impact on public understanding of basic economics than a million arcane books and academic journal articles.

Bastiat was pretty much the George Carlin of 1800s France: A brilliant, badass, sarcastic, quick witted, rhetorical genius with no patience for stupidity or crackpots. A righteous econ-warrior who was always willing to take on spreaders of economic fallacies and disinformation in glorious intellectual battle.

Bastiat would take a bad argument, like the case for protectionism, and run with the flawed logic of its proponents. He knew the arguments of the protectionists better than the protectionists themselves. He would extend their case out to its logical extreme and reveal the patent absurdity behind asinine ideas like prohibiting voluntary trade between nations, and he would do it in a way that turned the whole exercise into a joke on the protectionists. It takes a special kind of brilliance to not only demolish your opponents arguments, but also to do so in a way that makes people laugh and think.

Bastiat's Sophisms is like a textbook for deconstructing almost every boneheaded economic fallacy one can come across in public discourse. Combine The Petition's deconstruction of protectionism with the "succinct and flawless argument" of the "Iowa car crop" and you've got the world's best argument for free trade in under 5 pages.

Protectionism destroys wealth, trade is a form of technology, and the idea that Americans should "buy American" is as morally repugnant as the idea that whites should "buy white". Those three simple facts turned me onto economics back in the day and remain the three most powerful arguments in favor of free trade that I've ever encountered.

Thursday, April 22, 2010

My first thought after reading this article was that it was a breath of fresh air in the morality and ethics debate. Having suffered through a whole semester worth of ethics and society, Ms Rand was correct when she said that no one had ever wondered about why ethics are required for human beings. Her theory of the relationship between ethics and survival was interesting, and definetley has made me inquire more about the reason why we need ethics or not.However I had a few criticisms about Ms Rands rationale behind this theory. She mentions that," The physical sensation of pleasure is a signal indicating that the organism is pursuing the right course of action. The physical sensation of pain is a warning signal of danger, indicating the organism is pursuing the worng course of action." I think that maybe Rand oversimplified this in her rationale. I can think of a few instances where this in not true- for example human beings have had to physically exert themselves to hunt, gather, grow crops etc. Though there might be a physical sensation of pain, this is still needed for survival and humans do it without thinking it is "dangerous". Also, this is commonly seen in other organisms like animals who must migrate across continents to stay alive during winters.It is also important to note that

Tuesday, April 20, 2010

I first read Atlas Shrugged when I was pretty young and I found it a pretty sordid affair. I was young enough (like a Soph. in high school?) to still divide things between good and bad, nice and not nice. Atlas Shrugged was not good, and it certainly was not nice. The worst part was the really pulpy, syrupy-sweet love story between the two protagonists (as a given rule, if your love scenes fail a 14 year old boy, they should be omitted). Anyway, with some heavy omissions i think this essay brought some clarity to Objectivism (though she did relentlessly bludgeon me over the head with these ideas in Atlas Shrugged). After the endless cycles of regressions about mankind’s impulses she gets to the true exigency of the article: ‘Man needs thought and productive work’. Well, I kind of love it, but to be honest, it’s all so German. I find a lot of value in the whole Protestant-Ethic stoicism of hard work, it really does bring me happiness and purpose (as it does all SWEET Scholars), but so does screwing up; so does getting a $100 bill that I did not earn; so does going out and tying-one-on until 4:00 am, buying people I don’t know drinks with a credit card, then making them listen to me slur on about how practical I am. Oh how I truly relish my “moment’s relief from [my] chronic state of terror”. Oh how Ayn must hate me sometimes. In fact I think I love acting irrationally, most people do on occasion, some more than others. How does objectivism take this into sufficient account in society? Objectivism does not seem to have a very solid plan for dealing with the screw-ups, but I would say that is a hell of a lot better than rewarding them like communism.

Was Ayn so pragmatic that she sort of missed reality? The codes she requires all to abide by are a bit draconian. For an objectivist society to function, people must abide by an ultra-rigid moral code of egalitarianism, stoicism and strength. This makes for a very productive society, yet one’s less-than impressive early twenties could be punished much more severely than is warranted. There is no safety net, which might be fine for an established adult who has a sizeable savings, but what about someone just starting out? How much suffering are we as a society going to let befall a 19 year old who has had a poor start in life? In Ayn’s society does any form of assistance amount to oppression of the society at large?

In a bit of an aside, why do social theorists all proclaimed their age, their cause, their time, and their place, to be the end-all battle for the sole of mankind? Why is every new generation morally bankrupt, lazy and selfish? I understand the rhetorical appeal, but how can any of this be a true statement? Ayn’s parents probably accused her of the very same things, Ayn probably had to hide her Benny Goodman albums under the bed that she like to sleep in past noon.

All kidding aside, this is where I find the real value in Rand’s work:

…that therational interests of men do not clash—that there is no conflict of interests among men who do not desire the unearned, who do not make sacrifices nor accept them, who deal with one another as traders, giving value for value.”

I really like this, effectively the ideological distillate of Rand’s thinking. I wish she had taken it further by exploring how self-interests can amount to mutual benefits. Yet, as with many ideologies there is the inherent flaw, the one variable that is never quite accounted for, the human factor. Humans are really sloppy.

And Camilla, I’m so sorry, but it seems even the women economists are misogynists.

Trying to digest objectivist philosophy is like trying to push your face through a concrete wall. It wont fit and it'll just make your head hurt.

Most philosophers at least make a half-hearted attempt to put their theories into terms people with no particular expertise in their field can understand. Rand and the Objectivists seem to have made a concentrated effort to do just the opposite.

I wont pretend to have much of an idea about what the hell she's talking about. If there's a good point anywhere in this painfully long stream of conscience rant someone should do me a favor and put it in terms a simple economist can understand.

I disagree that as a whole we as people are becoming ones that lack morality. I was a bit sickened that this was the tone in which Ayn Rand introduced her discussion. Well sure people today walk around with a lot less clothes and say more foul things than their grandparents did at our age, I don’t believe this means that we are more or less moral than they were. It’s not like more people want to grab big sticks and hit other people in fact crime rates have been dropping steadily. If anything the biggest change is that we live in a world where individuals are more open. If someone is sleazy it is far easier to tell this as they are more open about it. This can be seen as a blessing as when people wear their morality on their shoulder this makes our life far easier by lowing transaction costs. There was an excellent economics presentation by Tyler Cohen on fashion at the conference in Vegas that Sherri, Rich, Daniel , and I attended last week. He explained that fashion is useful and that restricting what people wear would make it difficult for individuals to get signaling which they do through fashion which helps us to group people with others as well as group ourselves. This signaling is one that is very valuable and the amount of signaling that occurs through fashion is immense and lowers so many transaction costs especially in the networking fields of making friends or dating. I think that this idea of signaling can also be applied to morality and it is our benefit that we live in a world where it the moral altitudes of a person are more transparent.

Many like Rand think that the reasoning to why people are less “moral” is because we today view morality as a measure of man rather than God and what society states to be acceptable. This central “Social” theory of morality is one that is considered to be flawed as what actions are of value and reason are deemed so by the group rather than the individual. I can think of an interesting point as to why this would be a misconception this centers to be the beauty of common law in general. You have clear examples as to what is acceptable shown to you though society. This in effect makes “acceptable” behavior cheaper hence more prominent because you do have to go out into the world testing all behavior for yourself.

I do think that she makes a good point when she defines value and captures that it is something that has to be created by the living and that without life we could not have values. This is perhaps the only piece that was brought up that could be accepted by all of the theories of morality that were mentioned. I think that the Objectivist school of thought is interesting although I am unsure if deep down in my heart a as compassionate person that I could frolic and run merry down the street chanting the charms of self-interest even if I’m an economist.

Tuesday, April 6, 2010

Mr Rothbard made his view point very clear right from the very start of this article. I know my english 111 teacher would probably have failed Mr Rothbard for his claims and his child-like critique on Keynes. This article was just full of baseless remarks that are quite unnecessary while discussing economic principles. For example when mentioning the secret society that Keynes belonged to, how is it relevant to put in their views on homosexuality and their promiscuity. It sounded like gossiping not intellectual dialogue. Mr Rothbard made me realize how writing can be ever so biased when funded by a institute with a set agenda. The irony of it all was that Rothbard was doing exactly what he accused Keynes of doing with many economists of that time. I dont know if Rothbard is a historian, or an economist but he was obviously not good holding an intelligent dialoge. He sounded more like someone from a gossip coloumn!The paper infuriated me, not only because I feel Keynes realy had a lot to offer, but because of the ease with which Rothbard broke down Keyne's character without good research or testimony. I also strongly dislike Rothbard's almost vicious unecessary remarks concerning Keyne's family background. After reading about 15 pagese mostly only about any shortcoming that Keynes had I gave up! Definitely the worst serious article i have read i a while!

Mr. Rothbard, thank you for clearly airing your bias in the introductory paragraph. I think we both delight in opening any academic discussion with a concise and audacious personal attack on our opponent’s character and values, as it most certainly lays the foundation for a meaningful and productive dialogue.

Admittedly I glossed over most of the asinine commentary, as I don’t doubt that like most economists, Keynes was a petty, insecure misanthrope, (along with Mr. Rothbard), and focused more on parts about monetary policy, the crux at which I see the two ideologies fracturing. Keynsiens wants to control money. An absolute monopoly over money is essential, as it is their most powerful tool for controlling the economy. Contrarily, Keynes believed that inflation was in effect the government stealing money from the people, yet was absolutely against any form of “maketization” of money, i.e. the gold standard. Does any of this add up, or am I missing the point? He was biased towards maximizing the benefit for the general population and believed that was best achieved through central government planning, yet completely acknowledged Soviet poverty and failings. He was not a communist, but loved their rebelliousness. From what I gather, he advocated and lobbied for the IMF and the World Bank, but wanted countries to be able to exert total influence over their own money and finances. Are these contradictions and inconstancies, or are they an attempt to create institutions that check and balance one another? I struggle with this guy’s theories and ideas, and therefore don’t feel l can really criticize any of them. He wanted to smooth out the business cycle, tame the animal instincts and the over investment, but thought that government spending should always fill in any corrective market movements?

What is the appeal of Keynesian economics? I would guess that it gives politicians a perfect platform to show their worth. To show how well the economy did while they were in office ten years borrowing vast sums of money. To show the general public how they prevented the next Great Depression, or how they reigned in a malignant Wall Street financial anomaly through regulation. Really, we pay them to actually do things, and to most Americans, the economy is always in amongst the three most important issues. A politician can’t go on television and say “relax, it will solve itself”, they’d be shot.

Anyway, sadly, this article was far to caustic to be taken seriously, it came across as all piss and battery acid. Anytime someone attacks another on this level, a red light should go off. Much of the hatred Rothbard directs towards Keynes probably stems less from ideological fission and more from a social-economic discrepancy. Keynes was a mildly anti-Semitic, upper class, over-privileged, English twit. Rothbard was from a Jewish family living in the Bronx, an ardent Libertarian, a disciple of Luwig von Mises, and an academic pariah. The two men were practically engineered to hate one another. Keynesian economics is the dominant economic system of our time, and there must be some value it. Perhaps it offers guidance on what to do, though more than likely, it offers guidance on what not to do.

p.s. I am going to find something that is absolutely glowing with Keynsian splendor and read it before Thursday

p.p.s. something that just gushes about this man, like something written by a secret admirer.

Rothbard's argument is somewhat vitriol, he uses ad hominem extremely freely without realizing that it distances him from the reader. Ignoring how many times Keynes is described as a terrible and malicious figure (perhaps George Lucas based his idea for Palpatine off of this text) I find the style of criticism interesting.Although quite long and sometimes a bit dry, Rothbard greatly explained Keynes (albeit with much bias) before launching his actual criticism. The information set fourth created a picture of Keynes that was both very egotistical and manacle, it almost seems like Keynes was "playing" with economics to watch the lower classes react.I found that his personal separation being the root for his fascist beliefs was the best defended argument. Things like the fact that Keynes would define himself as bourgeois and his historical agreements with figures such as Mussolini and Oswald offer a nice comparison for thinking about the Road to Serfdom. The criticisms offered in the latter sections reinforce my beliefs in the correlation between control and fascism.In the end Rothbard's use of derogatory terminology was not necessary but he was at least being honest in pointing out he did not like Keynes. I would not however suggest this text to someone to teach them about Keynes.

There should be in fact no plan,If you want to tango with the invisible hand.

The Apostles may have a thing or two say,But in the long run does this matter anyway.

As far as to the whether your status was that one that is undeserved Keynes?I will have to wait until Thursday and ask Richard Raines.

*Sorry Rich to put you on the spot but it’s really hard to think of words that rhyme with Keynes. This poem though I think is epic fail "Belle the Cow" was definitely the peak of my poetic career or shall I say “my skyscraper.”

Funny enough this article reminds me of many that have been written about George W. Bush. I thought this week’s reading was interesting and can’t wait for the discussion. I would be curious though to count the number of times that Rothbard saying the following words ego, charismatic, contempt. With this in mind I am sure that the excessive use of these words does little to vindicate his main point as it just makes me want to look for more perspectives on the topic.

I thought this article was harsh, but I also thought that Rothbard did a thorough job of researching his material as well as using quotes and citing sources to back up his points.

It is interesting to read about Keynes’ back ground in the Apostles and how that influenced his world-view and outlook on life.The elitist superiority complex dominated the late 19th and early 20th centuries in both Britain and the United States, as evidenced by the imperialist policies of the two nations and concepts such as “Manifest Destiny”.It seems that Keynes took that view to a new level where whatever choice he made was the correct one.Free trade when it benefited him and his political maneuverings for power, and protectionist policies when they were expedient to his aims.

His character seems all too apparent from the fact that he used whatever means necessary to get to the top, including ostracizing and discrediting former close friends.

I think an interesting follow-up to this week would be to read an article or an excerpt of one of Keynes’ books to get a balanced perspective.

I had to take this article with a grain of salt as I felt it to be negatively biased. If the Ludwich von Mises Institute had a least favorite person, Keynes would be their man. In my opinion the author was not very objective and had it out for Keynes.

The author paints Keynes as egotistical because he was confident that most intellectual problems could be solved. I think this is a lame criticism. While he may have been arrogant, what is the big deal? Most of our Enlightenment-Era Founders shared this sentiment. The Austrian that we listened to last week sounded arrogant to me.

The author talked about Keynes changing opinions on the issue of freetrade during the 30's. While this could be a negative, I wonder if every situation needs a certain amount of flexibility with whatever your views are. Every economic situation is bleeding complex so it seems to me like you need to adapt to the situation. I can kind of see where Keynes was coming from when he said,"I am afraid of "principle." Why put yourself in a box?

This article did not mention Keynes views on the Versailles Treaty.I read in other sources that Keynes had the foresight to be against the large war reparations that the Allies wanted Germany to pay as a result of WWI. It is a fairly accepted view that the conditions created by the Versailles Treaty were part of why Hitler rose to power.

I found an insightful video that has Lord Skidelsky and Russ Roberts in it.Link